Securities and Exchange Commission (SEC) yesterday launched a plan to establish a special purpose vehicle (SPV) for unclaimed dividends of more than 12 years. SEC estimates unclaimed dividends to be about N80 billion.
The plan is a volte face from recent position by SEC that the provision of the Companies and Allied Matters Act (CAMA), which limits the lifespan of dividend be amended to ensure shareholders or their beneficiaries could claim their dividend at any time.
In a circular sent to capital market stakeholders yesterday, the apex capital market regulator called for a consideration of a new rule that will set up the Nigerian Capital Market Development Fund (NCMDF) which will take custody of all unclaimed dividends of 12 years and above.
Under the extant laws, unclaimed dividends will remain available for collection by beneficiaries up till 12 years when they become statute-barred and subsequently return to the companies that paid the dividends.
The new rule seeks to change the return of the unclaimed dividends to companies that issued the dividends.
According to SEC’s proposed “rule on application of 12 years and above unclaimed dividends”, companies and registrars in custody of dividends which remain unclaimed by shareholders 12 years after the date of declaration or subsequently attain the 12 years threshold shall upon the coming into effect of this rule transfer such money into the Nigerian Capital Market Development Fund (NCMDF).
“All companies and registrars shall not later than 30 days after the end of every calendar year forward to the Commission a report of unclaimed dividends in their custody, which shall specify compliance with Sub Rule (1) of this Rule. Companies shall disclose details of compliance with this Rule in their annual reports,” SEC stated.
The apex regulator stated that it relied on provisions of Section 313(1)(n) of the Investments and Securities Act (ISA) 2007 in deciding on the rule. Section 313 provides SEC with powers to make rules for the orderly governance of the capital market.
The proposed new rule will undergo a two-week stakeholders’ review period, after which the Commission will decide on its next move in the rule-making process.
Securities and Exchange Commission (SEC) Director-General, Mr. Mounir Gwarzo, recently said there was need to amend some laws on the capital market and corporate affairs in order to attract and retain investors’ to the capital market.
He noted that the provision in CAMA that limits dividend lifespan to 12 years, after which it becomes statute-barred and cannot be claimed, should be amended to ensure that investors can claim their dividend at any time whatsoever.
“We don’t think that is right, the international best practice is that dividend must be in perpetuity. Once you can supply evidence that it is yours, that person should be able to claim it. The lacuna is a provision of the law and we are partnering with the parliament to see that such laws are amended and we had an excellent collaboration with them,” Gwarzo said.
